Getting funding to implement or develop a new project is no easy task. In a lot of cases, you’ll have to prove you’ve taken steps to get there on your own. You’ll also have to know when it’s the right moment to ask. Other than grants and loans awarded at regional initiatives and contests, there are actually a number of ways to find the money you need.
Here are five of the most notable:
If there are people in your social circles (family members, friends, cousins, etc.) that show an interest in what you do, ask them to make a financial contribution to your project–love money, as they call it. Whether it’s out of friendship or love, these people can invest in your business. However, they could become involved in your business and participate actively in it, which is not always advisable. Money and love don’t mix! Many horror stories as success stories about this topic. Our advice is to form a clear agreement with these people. If you have to ask a loved one for a loan, be sure you can repay it and determine when you will be able to do so.
If you are in the process of getting a business off the ground, you might be intrigued by the concept of angel investors as a way of obtaining financing. Anges Québec [Québec Angels] is an example of a company made up of such investors. CEO François Gilbert tells me that 147 qualified members possessing significant capital are ready and willing to invest. They’re also willing to share their know-how by becoming active shareholders in the company. “An investment made by the members of Anges Québec will be divided amongst an average of 10 investors and will generally total $500,000 ($50,000 per member). These amounts are mostly invested into start-up businesses. Out of the 42 investments made until now, not a single one has gone to a for-profit business,” he says. There are a number of similar companies and I encourage you to investigate; each one has its own way of operating.
If your business is underway and has been financed by angel investors, and you foresee continued growth, you may need more capital in order to keep the ball rolling. Venture capital is one sure-fire way of doing this, as Chris Arsenault, Associate Director of iNovia Capital, maintains. But he is quick to note that you’ll have to convince a venture capitalist that your business is likely to grow: “When you decide to sign on with a venture capitalist, you become their partner, and you both commit to a long-term relationship. It’s important that you have an exit strategy–an agreement between both parties,” he says, “such as entering the stock market, or selling or buying back your company.” This exit strategy is generally done within the 3-7 year period following the investment. A venture capitalist is a corporate body possessing capital to which a number of institutional and individual investors contribute. They can help you manage your company’s treasury and the various steps that will help develop your business. Furthermore, they have in-depth knowledge of your target market. According to Chris Arsenault, venture capitalists have the power to attract talent, establish business relationships and encourage more capital thanks to their network of co-investors. Venture capitalists generally offer higher amounts than those offered by angel investors. These amounts can range anywhere from $500,000 to $10,000,000, or more. A number of companies can provide you with this type of financing. Once again, we encourage you to talk to investors working in these companies to know more about what they do, and to be certain that this method of financing is suitable for your situation.
You can also opt for crowdfunding for your project. We invite you to read it again! If you opt for this financing solution, I strongly recommend that you create a community around your project before beginning any fundraising. That way you can ensure that it’s a realistic project and the money raised will be used for a specific purpose.
Finally, if you are not completely prepared to move forward with the aforementioned solutions but you are patient, bootstrapping (launching your business with no external funding) can be a good solution for you. It entails a new way of doing things, of doing more with less, and it requires you to tap into your creativity. Focus on getting yourself on the market, and selling a simple product or service that people are willing to pay for and that responds to a real need. By starting to sell as soon as possible, you’ll receive comments that will allow you to further develop your product or service. You may also receive propositions for service exchanges or distribution partnerships. If these business relationships inspire confidence, don’t hesitate to accept.